In any event, potential claimants can take away three important lessons:
• when courts go beyond a review of administrative processes to look at the underlying medical evidence, claimants may fare better;
• surveillance is a fact of life for many LTD claimants; and
• a plan that offsets SSDI benefits may ultimately pay a disabled worker little or nothing.
A Mixed Bag of Facts
Elizabeth Bowlin worked as a Relationship Manager for Chase Bank. She met high net worth clients, reviewed extensive financial information, made presentations, marketed sophisticated financial products and built a portfolio of clients. The job took focus.
After several years, her health started to fail. She had headaches, vision problems and was subsequently diagnosed with a variety of conditions including a liver tumor, goiter, Addison’s disease, generalized anxiety disorder and depression.
Her physician concluded that she “lacked the ability to concentrate for a significant period of time, had limited ability to work with numbers, and was unable to review financial documents to prepare business packages for clients.” Further, her “depression resulted in unexpected bouts of crying (which made her unable to meet with clients).”
During the relevant period of time, she also traveled to Peru to settle her mother’s estate and was observed going to the gym and driving a car.
At Prudential‘s request, Ms. Bowlin applied for Social Security disability benefits. Her application was denied, and she did not appeal the determination. Ultimately, after an internal administrative appeal, Prudential determined that she was not eligible for LTD benefits. Ms. Bowlin brought a lawsuit to challenge that denial.
LTD claims are messy because people try to work and carry on with life even when they are sick, at least for a while. The administrative appeals process is also long, and symptoms may change with time.
De Novo Review is the Key to Success
The most important sentence in the District Court’s decision comes early in the third paragraph: “As previously determined by the Court, the Court reviews de novo Prudential’s determination to deny long-term benefits.“ This means that the Court decided it could look at the underlying medical evidence to determine afresh whether Ms. Bowlin had made the case to receive LTD payments.
The general rule for review of an ERISA plan administrator’s decision is that, if the plan clearly gives the administrator the power to exercise discretion (which virtually all plans do), then courts should accept that decision unless there is gross misconduct .
In many federal circuits, that means that courts look only at process questions – did the administrator reply within set deadlines or was the appropriate language included in the plan document, for example. This generally does not work out well for LTD claimants.
In the Ninth Circuit, the letter of the law is the same, but the interpretive emphasis is reversed. “The default is that the administrator has no discretion, and the administrator has to show that the plan gives it discretionary authority in order to get any judicial deference to its decision.”
Courts exercise greater scrutiny to determine whether the grant of discretion to a plan administrator is unambiguous. How unambiguous is really, really unambiguous? Surely, any ERISA litigator worth her salt can drive a truck through that loophole. California courts are therefore much more likely to re-examine underlying medical evidence in a wrongly denied disability claim. That tends to work out better for LTD claimants.
The Court reviewed Ms. Bowlin’s medical records, determined that she met the requirements of the plan, reversed the plan administrator’s decision and awarded her benefits.
When it Comes to Disability Claims, Assume you are Being Watched
Part of the evidence presented by Prudential had to do with Ms. Bowlin’s activities with friends, and the fact that she drove her car and went to the gym. How did Prudential know these things?
The record is silent, but this is the kind of evidence that private investigators hired by insurance companies look for. They also sometimes scour social media posts. LTD claimants should assume they are being watched and act accordingly.
Watch that SSDI Offset
The LTD plan under which Ms. Bowlin was covered allowed Prudential to offset any benefit that it paid against any Social Security disability payments received. This is a very common provision in LTD plans.
In fact, Prudential’s plan went even farther, allowing it to offset estimated SSDI benefits before a clamant began to receive them or even if a claimant never received them because he or she failed to file an application with Social Security. It was perfectly possible for a qualified claimant to receive no benefit at all under either the plan or SSDI.
READ MORE LTD INSURANCE FRAUD LEGAL NEWS
That was close, however. The third and final lesson of Bowlin is that claimants need to be alert to the risk posed by SSDI offset provisions and to be prepared to pursue SSDI appeals vigorously.
Does the Bowlin decision bode well for LTD claimants? It is too soon to tell, but Ninth Circuit decisions bear watching. If there is plausible jurisdiction in that circuit, it seems like a good place to file a long term denied disability lawsuit.